Last updated 4:35 P.M. EST

Despite 1.5% Sales Gain, Talbots’ Earnings Fall
NEW YORK — In the midst of digesting its J. Jill acquisition, The Talbots Inc. posted first quarter earnings that fell 21 percent on a 1.5 percent sales gain.

The Hingham, Mass.-based specialty retailer also said second quarter results would be below Wall Street estimates. Management said earnings per share will likely reflect “the impact of J. Jill’s weak second quarter sales, which will result in a significant loss in the period and represents a continuation of their first quarter trends.”

For the first quarter ended April 29, Talbots’s net income dropped to $27.4 million, or 51 cents a share, from $34.5 million, or 63 cents, in the prior year on sales that climbed to $453 million from $446.5 million.

Ross Strong Sales Aid 4Q Earnings Increases
NEW YORK — Ross Stores showed robust first-quarter sales and earnings increases driven by strong sales in the Southwest and Texas and a decline in distribution costs.

The off-price retailer reported first-quarter net earnings Wednesday that rose 18.2 percent to $59.2 million, or 41 cents a diluted share, from $50.1 million, or 34 cents a share, the prior year. The average analyst estimate for earnings per share for the quarter was 41 cents.

Sales also increased 18.2 percent to $1.3 billion from $1.1 billion during the first quarter last year. Comp store sales for the period were also up, rising 6 percent over last year.

Specialty Retailers Report Improved Profit Margins
NEW YORK — Improved sales along with less markdowns drove the top line and gross profit margins of specialty retailers reporting results this week.

On Wednesday, ‘tween girls retailer Too Inc. posted earnings that soared 58.1 percent on an 18.7 percent sales gain for its first quarter while Charming Shoppes Inc. clocked a 7 percent profit gain on a 22 percent sales increase. Zale Corp., in the midst of an Securities and Exchange Commission investigation while having an acting chief executive officer at the helm, said sales jumped 2.2 percent with earnings benefiting from a retirement benefit settlement.

On Tuesday, plus-size retailer United Retail Group experienced significant gross margin gains that pushed earnings up 92.8 percent on a 2.7 percent sales increase.

Zale said its third quarter net income climbed 15.9 percent to $16.8 million, or 35 cents a diluted share, from $14.5 million, or 28 cents, in the prior year’s quarter on total revenue that climbed to $526.9 million from $515.6 million. Results include charges and gains made from severance payouts and the settlement of “certain retirement benefits.” Excluding these line items, net income for the quarter was $11.6 million, or 24 cents.

Acting ceo Mary E. “Betsy” Burton said on a conference call that the company is “cooperating fully” with the SEC investigation, which is in regard to accounting issues.

“We are reviewing the item they raised which relates to the areas of extended service agreements, leases, accrued pay roll and the timing of certain vendor payments,” Burton said. “We believe based on our current knowledge that our accounting was appropriate and complied with [generally accepted accounting principals].”

For complete coverage, see tomorrow’s WWD.